COMPUTERS THEME investors disappointed by market underperformance

Computers has destroyed investor wealth on Tuesday. It returned +0.52% to close at 1097.74. On a day when the overall market breadth was 34%, it closed higher than 71% of the market. In comparison, the benchmark SP500 index closed today at +0.01%.

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Monthly Performance

Alpha (outperformance)

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Volatility

Return distribution

~COMPUTERS has been underperforming the SP500 index in recent time, after having outperformed till 20 Mar, 2018. Over the last 1 year and 9 months, ~COMPUTERS outperformed the SP500 index on 58% days.

During the last three months ~COMPUTERS was mostly loss making and delivered on average -0.3% per day. It's best return during this period (of +2.62%) was on Wednesday, 31 Oct, 2018. While it's worst loss in the same period (of -4.66%) was on Wednesday, 24 Oct, 2018. There was initially a bullish trend during this period which started on 19 Sep, 2018 and went on till 21 Sep, 2018. The bullish trend returned +1.35% to investors. This was followed by a bearish trend that started on 4 Oct, 2018 and ended on 11 Oct, 2018. This bearish trend lost -8.54% of investor capital.

On monthly basis, ~COMPUTERS delivered profits and losses in equal number of months. ~COMPUTERS delivered profits less regularly than SP500 index. ~COMPUTERS was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -10.85% compared to -7.75% returned by SP500 index in Dec 2018. ~COMPUTERS had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -20.12%. It is interesting to note that both ~COMPUTERS and SP500 index significantly outperform during months when quarterly/annual results are announced.

I made my money the old-fashioned way. I was very nice to a wealthy relative right before he died. -- Malcolm Forbes

~COMPUTERS is becoming less volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in ~COMPUTERS's volatility from 27 Sep, 2018 to 31 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 19 Sep, 2018 to 29 Oct, 2018.

Advanced/professional short-term investors should note that ~COMPUTERS has significant positive skewness in it's return distribution. This indicates that investors can expect ~COMPUTERS to recover from drawdowns quickly. Which makes ~COMPUTERS a good candidate for investing on short-term bullish trends or even counter-trends hoping for a pull-back.

~COMPUTERS has more chance of extreme outcomes than the SP500 index. Therefore, ~COMPUTERS must receive a lower allocation than SP500 in your portfolio. SP500 index usually has shorter drawdown period than ~COMPUTERS.

On a general note (since you are interested in ~COMPUTERS), three small cap instruments that deserve special mention are KEYS, BURL and ZBRA. They have all outperformed the market and must be closely watched for investment opportunities.

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